For the other side of this story, I wrote two articles earlier on the potential for distributed generation and distributed storage & demand response. Here are the main conclusions:
"In comparison to the utility scale alternative, distributed generation (primarily solar PV) has a fairly low potential and, in the vast majority of cases, will be unnecessarily expensive and complex.
This does not mean that distributed generation will not be deployed. Niche markets exist and the ideological attractiveness of this energy option remains very high and extremely marketable. What it does mean, however, is that distributed generation will most probably not make more than a minor contribution to the clean energy revolution that will have to take place this century. Headlines claiming that distributed solar will soon overthrow utilities everywhere should be patiently ignored until reality sinks in. As an example, the highly optimistic hi-Ren scenario in the PV Technology Roadmap from the IEA which has received broad PV-positive press lately forecasts about 8% of electricity from distributed PV by 2050. The vast majority of the remaining 92% will remain utility scale. It should also be mentioned that electricity accounts for only about 40% of primary energy consumption.
The final conclusion from these two articles is twofold: 1) distributed generation is affordable, but far from economic and 2) distributed generation can contribute, but only to a minor degree. For these reasons, the ideological attractiveness of distributed generation presents a particularly difficult problem: we simply cannot afford to aggressively pursue uneconomic solutions with very limited potential when it comes to the energy and climate issues we face today. The time has come to leave ideology at the door and get pragmatic about the challenge before us."